it is time for the 2010 premiere edition of "six in 60." oh, my goodness. i lost nine seconds already. stryker upgraded. united health care company upgraded from hold at citi. price target 39. boeing, aerospace krout perform by two firms this morning. >> joy global, farming construction machinery of companies price's target raised to 67 from 64 at barclays. mostly mining equipment like caterpillar competitor. morgan stanley upgrade to outperform by two forms this morning. shares of ms gaining 80% over the past year. intel upgraded to outperform of neutral. firm boosting its price target on intel.

26 from 24. >> we have no time. what's coming up on street signs? >> building exclusive. >> i all right. i will be back at 9:00 tomorrow. until then, here comes "the call." good morning. welcome to "the call." we have 90 minutes into the trading session and guess what, folks, first trading day of the year, stocks are moving higher. pushed up by commodities. we will discuss what to expect this month of january. larry, over to you. >> hello, i'm larry kudlow. ben bernanke says it is lack of regulation. not low interest rates that caused the financial crisis. we will discuss whether he's right or whatever. i'm melissa francis. what can we expect from m&a activity coming up in 2010? this is "the call" on cnbc. stocks beginning the new year on the new decade on a positive note. pushed higher by rising

commodities, oil, gold and copper as the dollar weakens today. in addition positive economic data also pushing stocks higher. we are going to have more on that in a few minutes. ism highest level more than three years. chinese manufacturing as well. grew by the most at about five years. take a look at the s&p is trading so far this morning. up about 16 points. almost 1.5%. pretty good move. dow right now is charging higher. led by intel and chevron. up 150 points. 1.4%. nasdaq right now is up 1 opinion 75%. almost 40 points. take a look at oil as well. one of the things that is driving the markets higher. up above 80 bucks a barrel. 81.20. gold charging higher as well. 26.5 bucks. a live report from the nin ex-in a few minutes. >> did you mention the ism? >> i did. i mentioned the ism. yes. chinese manufacturing.

>> big, boom. >> yeah. it wasn't scripted but i knew would be furious if i didn't say that on my first day back. let's go to mandy at the new york stock exchange. >> thanks for that. let's take a look at what's going on here on the floor of the nyc. bob pisani standing by me. >> gold and oil, no doubt today. >> absolutely. have you seen gold and oil move to the upside? certainly hoping to push all of the indices up as well. much better than the day we finished off for last year. >> important thing is the trade is back a little bit. you heard stuff talked with melissa about the fact we got the uk numbers better and chinese numbers better. dollar having the worst day in a month here. so there you go. you see the commodity stocks moving to the upside here. you have your three important brands, alcoa, all having a terrific day overall. then you have upgrades of some of the commodity sectors. goldman raised their price target for the whole -- dupont up. nicely here. exposure to cyclical end markets

'twas phrase they used. exposure and upgrades in number of other groups. refiners left for dead last year. remember they did not have a great year. big upgrade. over at deutsche bank. they are talking about the demand slowly improving. they are talking about oil, by the way, at $65. their average price for 2010. they are bearish on oiling and positive for the refiners because it i am proves the presented. lower the price, the more profit the refiners can make. the refiners are doing well here today. you have the weak dollar and some upgrades. got a general move to the upside on the markets. that's helping the commodity stocks. look the the dollar index. worst day for the dollar in over a month. problem i have, amanda. friday when that jobs report comes out if it is any way better than expected that is going to be dollar positive overall. it should be dollar positive. that could reverse. >> bears versus the bulls when it comes to the u.s. dollar and whether it can sustain or rebound. we started to see in the latter half. i have to ask you about

seasonalities. catch phrases that we use. the january effect. >> i would be very careful about that. did that help anybody last year? january was a down month. the s&p was up 20%. i think in this kind of unusual markets we ought to be very, very careful about these little favorite cliches. people who are not liking the oil up here, over $80 with the airline stocks, great december. revenues showed signs of improvement. if we keep up that will put the revenue improvements under a lot of pressure. >> see where the demand to back up those higher oil prices as well. weak dollar. thanks for that, bob. larry, let me throw it back to you in the studio. >> thanks very much. now, fed chief ben bernanke said over the weekend that lack of regulation and not low interest rates caused the financial crisis. steve liesman has the details. steve, before you begin, i want to talk about some economic data that just came out. i didn't know if mr. bernanke's reading the ism this morning. it corroborate it is chicago purchasing managers of last week. it suggests to me a

kudlow/liesman mini boom. your thought? >> i there may be more to go. if you look inside the data we start tornado new year and right way. institute -- coming in above expectations. here's the data. index 55.9, new orders off the charts. strongest of 2004. employment, 52. third straight month above 50 suggesting growth. manufacturing. inventories number that i want to point your attention to. that is still contracting. if that should turn around it might have a positive, even more positive effect on the index. construction spending you have to note coming in far below expectations for november on a huge decline at home building. on the housing bubble, ben bernanke saying that monetary policy not responsible for the housing bubble. we didn't do it. while it could be used to pop the next bubble, he said tougher regulation is the better method. >> stronger regulations, supervision, and aimed at problem was underwriting practices and lenders risk

management would have been a more effective and surgical approach for constraining the housing bubble than genuine crease in interest rates. >> both bernanke and don comber speaking at the conference. we asked other economists at the conference for the one thing that they would do to kick start the u.s. economy. >> i have been working with the banks and the mortgage companies to have the mortgage balances reflect market reality. because as it is now, homeowners are under water. >> over the long haul what we have to do is get the federal government finance under control. we are on a course for a definite national bankruptcy. we have to control entitlements, get that cutback. and we can't do it by raising taxes. we have to reduce spending. no doubt about it. >> i would probably cut the capital gains rate across the board for the economy for the

period of one year to 5%. and let it be clear a year from now it is going up to ten. year after that, up to 15. so that capital would migrate to its most efficient uses. >> larry, melissa, some ideas for you to start off the new year. cut the capital gains tax rate and get the deficit under control. steve liesman, very good report. boom, boom, boom. stay with us, please. is bernanke right? that's our topic. was it a lack of regulation and not lower interest rates that caused the financial crisis? i believe this is bureaucratic cover. let's bring in diane swann. michael pentos, delta global adviser. sitting to my left, unaccustomed position for mr. pento, i wanted to begin with you, low real interest, negative real interest rates, sinking dollar had nothing do with it. what did you make? what do you make? what signal, what message is mr. bernanke sending the financial markets here?

>> that we are doomed to repeat the prior mistakes. >> doom. >> no way we can avoid another bubble. you see, you can't look at a tailor rule or liesman rule or pento rule about interest rates. the market must determine interest rates. it is the supply of savings versus the demand for money. the personal savings rate fell to the lowes single digits in early part of this -- prior decade. and that demanded that inrates would be rising dramatically and that would have truncated the housing bubble. >> diane, i don't know. what about his quote? never say never when asked whether the fed should instead use higher interest rates to bust in next bubble. you don't believe him? >> no, i don't. i think the fed is now moving more and more towards an idea of introducing more asset bubbles into monetary policy. they have to. i mean, the reality of the last two bubble bursting and the effect that finance am bubbles are effective light. this is something we lived with, you know, for 800 years now. >> diane, with all due respect, asset bubbles don't have to be a

way of life, are they? >> they do. they do. they do. take every harvard classroom. they do this time all the time with behavior a students. any test you want. by their very nature, they hate the loneliness of buying low and rather the crowd of buying high. >> you can't regulate the bubble. >> you cannot regulate it away but what you can do is minimize -- you cannot regulate -- but you can minimize the regulations. one of the things i think that's important is to point that larry brought up, agree with him on this. that is ben bernanke is on the -- defensive right now. not the offensive. he is defending himself and defending himself during -- he did say this was, you know, initial cut in interest rates was because we were worried about deflation. that's absolutely true. the reletterality is that -- let me finish my point. let me finish my point. the reality is even though that was the target, the i am provide indications were -- there for the housing market. >> okay. there was a lot -- >> respond.

>> what if the money supply increased commensurate with productivity growth plus did -- >> you can't even count it. >> money supply increase commensurate with productivity growth plus the growth in the labor force. you would never have money supply booming 20, 25% as it did in the early part of the decade. and when money supply outstrips the increase in the amount -- >> are you worried about inflation now? >> look at the cpi. ben bernanke -- why aren't you worried about it? >> because you don't have a lot of inflation right now. >> look at the numbers. >> hang on. >> time-out. let me bring steve back in for one second. what disappointment -- >> i'm in the middle of my new year's resolution. >> i understand. i think we all are. steve -- >> how are you, larry? >> i'm good, thank you p. >> happy new year. >> what does appoints me aboutber in an keys 'speech yesterday, never mentioned the fact the fed funds rate was always below the inflation rate.

negative real interest rates. we had a boom in gold and oil commodities. let alone housing crisis. and we also -- we also had -- i forgot my last point. anyway, he -- >> precommitment. >> i'm sorry. ream interest rates negative. the dollar fell for the first time in five, six, seven years of the decade. we had a commodity boom. to me, those are market prices that suggested the fed was too easy for too long. >> i was unsatisfied by this speech. i think he went over some old ground that he had been over and if the fed was going -- fed chairman would step up and try to go against the conventional wisdom which is out there, the fed caused the bubble, which i also vehemently disagree with only because it lets the market so dramatically off the hook and doesn't require the intrarespects required of the market. let me just say he -- >> negative real interest rates, steve. the way we had for all those years. >> as we have now. >> that is going to spur.

all right. diane, pop in there. that will spur a lot of really -- unnecessary and as it turns out counterproductive speculation. >> we may be creating that bubble. right now there's not the churn in the money supply do that. it is as if ben bernanke dropped the money from all the helicopters and it got stuck in the trees and hasn't hit ground yet. when it does hit ground we have a problem. >> how do we read this for the current setting? i'm interested in -- he's always -- he's a clever man. federal reserve is very sophisticated. >> larry can i answer that question? >> for the current -- what's actionable and what does this mean as we look to the new year? treasury rates have been rising. recovery in the air. is the fed going to repeat the mistakes of the past, as michael suggested or not? >> if you think the past was a mistake then they are going to repeat it and that's as follows. don comb said specifically that cutting -- that raising interest rates now to attack any bubble out there would be to raise

rates to a very weak economy. while bernanke said it is possible to use it, don gave the other side of the coin and said -- >> diane, a lot of that money -- >> not 10% unemployment -- >> a lot of it is going to monetize the debt, too. >> we are going to leave it there. >> happy new year, melissa. i didn't get to say happy new year to you. >> happy new year to you. >> thanks, guys. coming up next, check on oil and gold prices on the rise. we will take a look at stocks moving forward. nice start to the new year for two new bank ceos. shares of bank of america and morgan stanley trading higher today. details on the new leadership.

with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here.

welcome back to "the call." traders decided to start 2010 being long commodities. we are seeing a buying three here across the board. oil prices up nearly $2. $81 barrel. gold prices up $27. and what's fueling all of this is the strong economic data. strong ism numbers here and

china's manufacturing growing at the fastest rate in five years. add to that the cold temperatures we are seeing and you see the tear we are seeing here in some of the winter fuels heating oil, 14-month high. natural gas is up sharply as well. and keep in mind as well, as we see fuel supplies continuing to decline, week after week, we are about 17% above where we were a year ago. refiners continue could to cut runs and makes this part of the market susceptible when we have cold temperatures. we are seeing wind chills across much of the country in the middle of the country, 20 below zero. we are seeing cold temperatures near freezing in california. and florida. and that's lifting those winter fuel prices as well as orange juice futures which are up about 7% today. when it comes to metals we are looking at the economic activity as well as the weaker dollar. helping to fuel the rise not only in gold and silver but in copper as well. keep your eye on that situation with the strike there. that's also helping copper prices near 16-month high now.

man da t mandy, back to you. >> happy new year to you. those higher oil prices sharon was talking about, of course, helping to push the stock market higher today. it is first trading day of the new year. and many on wall street believe that had happens in january dictates trading for the rest of the year, so-called january effect. when can we expect month? thank you very much for joining us today. steve, you are the so-called bull of the argument. and yes, even you are cautiously optimistic. i wish i had a penny for every time i heard that phrase. where's the caution and where is the top i ammism? >> welcome to frigid new york, mandy. i think that what kind of unfolding the way we have been expecting a couple of quarters now is that, you know, the -- the global economic recovery story is a real one. it is definitely fragile. so i think that the time right now to make extreme bets is probably not there. you have seen a lot of those,

the really raging huge opportunities kind of close as the markets and the economy have normalized. the economy is growing and global. it is going to be very fragile so optimistic, yeah. penny for every time. you are looking at an economy in the united states that will be in the high 2% gdp in the first half of the sxwreer getting to the 4% by the end of the year. so the january effect, i think, i got to agree with bob pisani. cliches are always priced into the market. there didn't work last year. >> right, larry. the opposite way. >> you need to -- >> down by 9% last january, right? >> exactly. lot of research and due diligen diligence. a lot of tough yards. tough available but tough, tough yards. it will be a lot of research in stock and securities. >> you sound more like bear than a bull at this stage. peter, where do you fit in? >> what i'm most concerned about in 2010, 2 main tribe of equity prices wlashgs is going to happen in the bond market. already seen this uptick in the interest rates. bond market is beginning to

tighten policy for the fed. and that is the major speed bump we follow. because of the policies of the fed, because artificially low interest rates on any economic recovery this year, i think inflation and interest rates follow us like a dark cloud. so if we do get this continuation of the improvement in the economy not only here but elsewhere, interest rates are going higher and the question is can it overleveraged economy which didn't do that much deleveraging over the last couple of years can they handle higher inrates and that's what i'm most concerned about. >> steve, i think peaer makes a good point. you can see it in treasury rates. not today perhaps. but we saw tonight recent weeks. but, steve wood, what about today's trading? big move up in oil. i think that's surprising. big move up and big rebound in gold after getting slammed down. are you not hearing me? >> i can hear you fine. >> wane to ask about the reflation. mini boom report. just as the chicago purchasing managers were.

if we are in a mini boom, let's say we are surprised and 4%, 5% growth. you have relatively cheap and plentiful money. when about the reflation trade? gold trade, commodities trade, industrials trade, ee americaning markets trade? all of which is reflation. >> maybe that's where i become the more bullish tone of voice here. i don't disagree with that. i just think that you -- you shouldn't just do all -- i think have you the reflation trade. how many times have you heard, larry, isn't this a fed induced bull market? isn't that the way it always is? they force the up, risk curve. i think that's what we will have happen now. i take the other side with my guest. i think that the fed will be very accommodating for a good long time here. and i do believe that inflation for the next two years in is going to be -- tepid at its worst. the fed will be your ally. and washington will be your new partner. you use that to your advantage.

i don't think it will be raging but i think it will be more stable and predictable than a lot of people expect. >> thank you for your time. we will discuss the case for an m&a boom during the new year. >> first, new leadership in big banks. morgan stanley, bank of america, we are going discuss the impact on the banking systems straight ahead. only here on "the call." what are you doing...? calling chase sapphire, seeing if we have enough points to stay longer. now? you don't have enough time... and you have to push all those buttons...

no buttons, someone answers every time. yeah, right... bet you a massage... yeah, ok. hi, julie... i have a question about my points. hi, what button do i press for a massage? hello? new chase sapphire... you call. we answer. no waiting. just press right here... go to chase.com/sapphire. chase what matters. just got three of sprint's best 3g phones. frannie has the palm pre, which runs multiple apps at the same time. frannie! oh! [ male announcer ] james, the jet-setter, can call from just about anywhere in the world with the international tour. and matt has the customizable htc hero with google -- giving him access to thousands of apps. [ tires screech ] bringing you the first and only wireless 4g network, as well as the most impressive lineup of phones. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com. as well as the most impressive lineup of phones. this is onstar reporting a stolen blue chevy tahoe, south on i-75, near exit 5. we're on it.

onstar, we may have that tahoe. ok, i'll flash the lights. we got it. it's in the clear. i'm sending a signal to cut the power. we got him. mr. ross, the police have recovered your tahoe.

two separate upgrades. analysts upgraded to outperform from neutral. you can see the shares are up by 4 opinion 6%. >> on to another bank with a newly installed ceo bank of america's ceo brian moynihan will give his first official address to the north carolina bankers association conference in raleigh this afternoon. the shares are trading higher ahead of that event. they are up another 3% today. pretty good. let's head to cnbc's mary thompson in raleigh. mary, how important is this speech today? >> you know, it is a very important speech for mr. moynihan.

especially in front of b of a's home state. we actually had a chance to speak with mr. moynihan a little while ago. he said what he will talk to the bankers about today is the bank's outlook for the economy which they expect to stabilize in 2010. while unemployment is still expected to be high around the 9% level. we will talk about other issues in the banking industry today. regulatory reform. we asked him if you had a wish list for regulatory reform, what would it be? here's his answer. >> the reforms apply to the activity. mortgage loans, we end up getting to the heart of the problem. if we lend too much to consumers to own homes, no down payments, excessive debt-to-income ratios, regulate that for all participants. we do we will do the social good we want. make sure people have enough money to buy a home. we have a lot to work through. make sure they apply to everybody. make sure they amy to the crisis. those are key elements.

>> we also asked him about what's been a sore spot for bank of america. delinquencies within small business loans were up 17.5% were at a rate of 17. 5% in the third quarter. we asked moynihan how do you balance the government's demands for the bank to provide more small business loans while you are trying to deal with the portfolio where delinquencies are so high. here is what he had to say. >> at the same time, in that area, in the area that gets larger loans, committed $5 billion more than we were doing last year. we will do that because the economy is stabilizing and we can take a little more risk. when the economy is at the toughest times, we had to pull back and as we see it stabilize we can take more risk and open up the buy box as we call it. and just a hair. that's prudent and consistent with what we would do as a company in the way -- what would be prun for a banking standards. >> moynihan said he's spoken with a number of large shareholders of bank of america. we asked him what their concerns were and how he plans to address those concerns.

their concerns are the same concerns we shared. execute well and start making money. get to the other side of the economy and return the capital to them in the form of divide s dividends. >> given the bank is acquired period before the fourth quarter earnings he wouldn't give any outlook other thannings for 2010. speaking of pay, we did ask him, you know, has there been any resolution with what he will learn as ceo of the company when he was named ceo there was no disclosure on his compensation. he said no, not at this point. and it will be forth coming. for now he's still working at his old salary. melissa, back to you. >> thanks, mary. two big banks seeing leadership changes. moynihan who you just saw, bank of america, also james gorman at morgan stanley. are they the right men for the banks? let's bring in dick. dick, you know, larry and i were talking about this. moynihan's really gotten a rough ride so far. they are giving him terrible time. does he deserve it?

did you see that interview? he seems like a good enough guy. >> you have to assume anyone that went through the process he has gone through to get that job has certainly won over the board of the company and must have a lot of brilliance because he was picked to go from business to business within bank of america. and clearly he was being groomed for a higher point -- higher position of leadership in the company. the problem, of course, is he's not proven he has been successful at any one of these particular jobs. nor does he have the background. >> where did he fail? where did he not do well specifically? >> well, have you seen a reduction in consumer loan losses since he was there? did you see an increase in the loans to consumers while he was there? when he was the head of the capital markets division did, in fact, we see the whole area blow up? you know. i mean, basically, in both of the areas of the bank that he, you know, functioned, clearry there was significant problems in his leadership did nothing to reduce those problems. >> you could argue, though, that a lot of economic and financial conditions were responsible for that but -- the point --

>> you are right. >> going ahead, looking ahead, isn't the outlook for the b of a and most of the big banks pretty darned good now? the worst of the crisis is well behind this. and why not just give moynihan a chance at it? the stock is up this morning. i think that's a positive sign. and as he makes his speech. why not give him a shot at it before trashing him? >> we have a buy on the stock by the end of the year, the stock will double. the earnings of the company by the end of the year will be running at a rate closer to $2.5 to $3. over the next two to three years it will break closer to $4 a share in earnings. we are not in any way, ship or form trying to say don't buy bank of america. all we are saying is that maybe brian moynihan is the right guy for the job but don't know based upon his history. bank of america is facing huge issues over the next couple of years. if this regulation that congress is trying to put through does go through, it is going to crimp the cash. >> which regulation, dick?

>> i shun call it regulation. the dodd/shelby bill on one side and frank bill on the other side. those bills that would set up the consumer finance protection agency will substantially crimp the profits of all types of consumer finance products. and bank of america is the biggest consumer finance company in the united states. so serious thought has to be given whether they should spin off their credit card business. the credit card industry is not attractive. you know, the government is saying they don't want capital markets fit in with traditional banking. what do they do about mayor linl much? the company has serious problems in its underwriting procedures and so it is a lot to be done there. >> okay. dick, thanks so much for joining us. >> coming up next, the outlook for global m&a. activity bowsing back even more this year. >> the world's tallest building opens for business. we are going to head live to dubai for a look at the $1.5 billion tower.

[ crowd gasps ] [ announcer ] if you think about it, this is a lot like most job search sites. - they let everyone in, - [ crowd groans ] so the best people can't stand out. join theladders.com. the premium job site for only $100k+ jobs... and only $100k+ talent. the same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online.

trade like a pro. trade with fidelity.

hi, folks. welcome back to "the call." i want to draw your attention to bucyrus. the stock is going to bust 07

buck as share. very strong. the mid cap index number one performer today. already done 100% of ten-day average volume. so the stampede. we are up 10%. we have broken into a new territory previous best day was 9.8. i have to get back to my computer. very hot. look at that move. 22% inside of a month. m metal mining machinery. >> mergers and acquisition activity was down 22% in 2009. lowest dollar value since 2004. in a report out today from m&a research group merger market recovery late in the year raised optimism for deals in 2010. so should we expect an m&a boom in the new year? joining us now p. bob of jones day. frank of m&a partner at solomon and cromwell. thanks for your time. bob, history shows us that big

recessions or big market routes are full of m&a booms. do you think this time will be no different n. >> i think it will be different in the sense i actually think it will be bigger. the -- the traditional market factors line up for a recovery. but the macro factors, this time arourngsd i think, speak to an even more active m&market in 2010. >> frank, do you agree? even bigger and better? >> it is hard to say bigger and better. but i think certainly bob is right. that there is a lot of factors working here and that are really driving the merger market. one is that the companies caught. that men that they now have a lot of cash. s&p 500 companies probably have about -- 100 thon $200 billion more in cash today than they had the day that lehman went bankrupt. that's in a pretty poor economy.

because of those cuts, they really can't extract a lot more in synergies so as a result, when they do a combination they are able to extract more synergies and also there's the strategic imperative to do it. i think there's a lot of factors. are we going to be active. yes. is it going to be bigger and better, yes. let's talk about that in december. right now, i'm pretty happy with where the m&a market is. >> bob, let me ask you, assuming we get a pickup merger and acquisition activity. we will make that assumption. how sit going to be financed? what i'm asking you here is are we talking debt or equity? this is especially salient after what we have been through regarding debt and leverage and all of the rest of it. equity or debt, how do you see that? >> well, i think you -- i think it is going to be a combination. m&a booms typically are characterized by particular kinds of transactions.

we went through in the last several years, back in the '90s, it was a stock merger. i think it is going to be a mixed bag. >> just hang in -- bosch, one second, please. president obama is arriving at -- i guess that's andrews air force base in washington, d.c. we are picking up the coverage. he's back from his christmas/new year's holiday in hawaii. there you see him talking to assistants. come back to me on this. i don't want to harp on it. i just want to ask, though, there is such an -- a view towards debt right now. and you do have banks that are on the road to recovery. but -- one wonders whether they can make the loans. the same with private equity. debt has a bad name. will that affect any financing for any m&a activity? >> of course it is going to affect financing. the banks themselves -- i don't think they will lead the provision of did he in this

go-around. yeah, there have been banks -- there have been banks lending in major m&a transactions. even in the depth of what we went through in the last year. the banks are going to be cautious. no question about it. on the other hand, there's an ocean of capital available in the world right now. whether that's -- you know, pension funds, private equity funds, hedge funds, sovereign wealth funds. you name it. trillions of dollars of money that has -- has to be invested. what example was the ims deal that was announced in november -- >> what about the exxon -- frank can i bring you back in? >> sure. >> if i'm not mistaken, stock and cash, was it not? >> that's right. >> i want to ask you, is that a harbinger of the future? >> i think so. >> larry, i think you are going to see a combination of deals. early last year, you were not seeing stock deals. the reason you weren't seeing stock deals was that they

thought their share price was too low. then they came back. i do think that we are going to get the financing for deals that make industrial lodgic. are we going to get financing for deals that are search, eight, nine, ten times leverage? of course not. but the companies that have cut the companies this really have done well through the great recession, those companies are going to be able to add more leverage. some leverage. >> bob, thank you. >> thanks. all right, up next. new year with a new budget. signs of the same old problems in california. jane wells is in los angeles with the story. jane? >> hey, melissa. this time california wants all of you to cough up money or else. you know, you owe us. i will explain after the break.

investors are demanding more for their money. good. this time, i'm watching fees like a hawk. i hate hidden fees. why should i have to pay for something that i shouldn't have to pay for? td ameritrade's pricing is clear and it's straightforward... it's spelled out upfront. no hidden fees... no bait and switch. no gotchas. and there's one flat rate for online equity trades... for big accounts... or small ones. that's the way it ought to be. time for fresh thinking. time for td ameritrade.

so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro.

n the deal would make navartis one of the biggest players for eye care products. unfortunately, both stocks are trading lower today. california yourners a new year with a new state budget deficit. more than $20 billion. state lawmakers say they are not looking for a bailout. they are turning to with a wash for help. cnbc's jane wells is in los angeles with the details. jane, don't call eight bailout.

is that what we are saying. >> no. it all -- what is? it is ball the meaning of is and bailout and all this. new year, old story. one year ago i stood here and told you california was facing a $42 billion projected gap through cuts and accounting maneuvers and federal stimulus and failed to close that completely and now with 2010 the gap it is facing $21 billion. california may be about to offer washington an ultimatum. give us a lot of money or we will be forced to cut social programs back to the stone ages. this week governor schwarzenegger will propose a budget and in his state of the state address called for a tax code that does not live and die by swings in the stock market. it is believed he will ask the feds for billions which he and legislative leaders say is not a bailout but california's fair share. for every dollar california gives the federal government, it gives back 78 cents and number that's been falling for years. the governor also wants the feds to reimburse the state for incarcerating illegal immigrants. here at hole, it is expected he

will propose more cuts to programs and may ask to repeal a recent tax break for businesses. and seek to increase furloughs. the furloughs are currently three day as month for most state workers but some unionized employees just won a court battle over turning many furloughs and will soon seek back pay. this as the governor has gotten an $11 billion bond measure. $11 billion bond measure on the november ballot to try to fix california's horrific water infrastructure system. that may be a tough sell now. dilemma, the governor is a lame duck. polarized ledge slated tour may see no political gain in working with him. waiting to see who becomes the next governor. buzz build being the possibility california could default on bonds. those state finance officials vow that will not happen. but even the governor of new york is now talking about california's problems. maybe that's to deeg fleck from his own. this week in "the washington post" warned against legislative dysfunction at the national level saying if you want to see

how that move yinds, just look west as have so many times before. >> that's a really depressing story. i don't know if you know the answer to this but you can handle anything. i will put you on the spot. who is emerging from this as the winner? i know the governor is really unpopular is and and is a lame duck. is anyone coming out with an idea or solution or looking positive in all of this mess? are voters turned off by the whole situation they are turning off the tv and they forget it? >> i don't think that voters are turning off the tv. they are really angry. there are no winners. no, no. there are no winners. the only winners, i said -- might be the people that are leading recall drives and throw the bums out which isn't really a -- a solution in the short term. there are still legislative and -- >> jane, jane, think about it. what about -- seriously, though. the pee party movement in california has become very influential. and -- >> huge. >> outsider, i think meg whitman does very well in this scenario because she is an outsider. not necessarily because of any great programs.

we don't know her details yet. she is an outsider and i think there is schwarzenegger fatigue, is a are a men tow legislative corruption fatigue. >> schwarzenegger was an outsider, too. >> that's rue. >> time for a new outsider. go outside the outside. >> how about jane? let's vote for jane. >> i will vote for jane. i already endorsed jane for governor. >> jane, thanks for joining us. >> i don't have a platform. >> you don't need one. throw the bums out. we hate everything that's going on. that's enough. thanks, jane. >> jane, jane, jane. all right. "power lunch" is coming up at the top of the hour. michelle michel michelle, what's in store? >> we are going to go inside the top trader's minds to see what they are doing and it was so easy last year. went wrong stocks and now what do you do? plus, the president of the food network on the fact that 3 million cable vision subscribers

cannot watch the food network. how much are their viewers worth? we will talk to the president in an exclusive. tomorrow, human reporters are gathering at google to talk about the android. supposed there new phone. we have a preview of what they will talk about. back to you guys. it is all coming up on "power lunch." >> coming up next on this show, bug ceremony at dubai to mark the opening of the word's tallest building. despite con concerns about the troubling debt pile. >> we will head live to dubai to show thank you $1.5 billion tower. i hope the defaults don't loom. all this is straight ahead. right here on "the call." it's so nice to have company after the accident.

aaahhhhh!!! what is it? someone paid me cash! but who? who? aflac. who pays you cash when you're hurt and missing work? aflac. ...cash to help with expenses that health insurance doesn't cover like the mortgage, gas and food. aflac! ahh!!! what now? someone's standing on my foot. all: ahhhh!!!! who could it be?

welcome back to "call." i'm diana olick in washington. u.s. construction spending fell bay larger than expected . 6% in november with private home building leading the way down. the commerce department reports private residential construction saw the biggest decline, 1.6% since june. that after rising 4.8% in

october. federal reserve board chairman ben bernanke says he's open to using monetary policy raising interest rates to fend off future housing bubble pps although he says that vigilant mortgage lending regulation should be the first course of action. and government controlled mortgage giants fannie and freddie to create a new agency that would backstop losses on all asset backed securities. the industry funded structure could avoid a future collapse. check back with the realty checkup at 2:50. >>ian a thanks for that. dubai inaugurating the tallest building today. trying to schiff intermichael jacksonal attention away from its deep financial crisis. guy johnson is in dubai on the ground with the latest. >> it was quite a show about half an hour ago. they kicked off the party with an incredible fireworks display here at this tower. let me give thank you numbers and facts and figures.

2,716 feet tall. the world's tallest building. this is the previous world's tallest building, taipei tower, eiffel tower. the inning piece of news tonight is that they have renamed it. renamed it after the ruler. it is highly symbolic that this has taken place. really is a sign of the times. balance of power in this region shifted away from dubbadubai. it . >> very fitting. i have to ask you, 50% of dubai's work force is real estate and construction based. my question to you is now that the tower is done, who will employ all of these people? >> that's the big question. is the business model here in dubai broken? i lived here 15 years ago and since then, this city expanded so dramatically and as you say,

purely based on real estate. what does dubai do next? how does it pay its bills? that's the question that they have to figure out now. and i tell you what, the kind of debt that this has, they have to do fairly dramatic things. will they raise taxes? that will drive away that as well. a lot of -- long, hard thinking to do here. do they sell assets? >> 90% of the population. thanks a lot for the update. much more on the world's tallest building coming up on "street signs." exclusive interview with the builder, mohammed alabbar. open the building immediately started foreclosuring upon. >> you nailed that. quick break. back to discuss this morning's market action. >> the list of stocks to watch as we head into the afternoon trading. (announcer) we're in the energy business. but we're also in

the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron.

♪ well, look who's here. it's ellen. hey, mayor white. how you doing? great. come on in. would you like to see our new police department? yeah, all right. this way. and here it is. completely networked. so, anything happening, suz? she's all good. oh, my gosh. is that my car? [ whirring ] [ female announcer ] the new community. see it. live it. share it. on the human network. cisco.